Chapter 167 The Importance of Personality (Second update, 4000 words)
"The prediction accuracy of the strong factor model based on machine learning bias correction is significantly higher than that of a single strong factor model."
"In particular, the PITH algorithm performed best in bias correction. Compared with the uncorrected strong factor model, the PITH-corrected model reduced the root mean square error (RMSE), mean absolute error (MAE), and mean absolute percentage error (MAPE) by 77.93%, 88%, and 88.77%, respectively."
Tong Yongshan looked at the last line of experimental conclusions as if he was looking at a peerless beauty without clothes.
If the predicted fit just now still has accidental factors, then the bias correction conclusion in the final experimental report fully demonstrates the effectiveness of this experiment!
In fact, most of the models in the financial field are not used to predict specific stock index information and stock prices.
Some models are used for risk assessment, some are used for macroeconomic analysis, and some are used for time series volatility analysis.
But since the day econometrics was born, countless econometricians who were mathematicians have fantasized that they could truly predict stock index fluctuations and stock prices.
In fact, they are also moving step by step in this direction.
From the Black-Scholes model for option pricing to the APT model used to price arbitrage; from VAR for risk management to LMM for managing interest rate derivatives.
Econometricians are relentlessly expanding the world's financial risks, bringing the world into financial crisis time and time again.
All of this comes from their desire for accurate predictions.
But this is easier said than done.
Whether predicting stock indices or financial derivatives, it is not just a blind prediction based on past trends. If that were the case, econometricians would be no different from gamblers who record lottery numbers in the hope of summarizing numerical patterns.
A prediction model is essentially a combination of multiple models, which is more in line with the definition of a large model. It is a model with multiple different uses. After summary training, it is an inference generated based on real data conditions in a big data environment, rather than a simple summary of rules.
In simple terms, it means creating a virtual real market and then spontaneously evolving future trends based on the real data in the training data.
But to this day, there is no model that can truly predict the price changes of any financial product with relative accuracy.
Because there are too many variables and the amount of calculation is too large, this was almost an impossible task before the birth of artificial intelligence.
Before this, in the field of traditional econometrics, the ARIMA model and GARCH model in the time series model had the highest prediction accuracy. Both models were proposed more than 30 years ago.
Robert Engle and Clive Granger, who proposed the GARCH precursor model ARCH, also won the Nobel Prize in Economics in 1949.
Even so, the GARCH model's volatility prediction accuracy does not exceed 50%.
In the field of machine learning, some scholars and talented Wall Street analysts are also using long-short-term memory neural network architectures to predict the prices of financial products, but the prediction accuracy is even less than satisfactory.
Now, with the combination of strong factor models and neural network algorithms, the deviation rate has been reduced so much. The low deviation rate shows that the improvement in prediction accuracy is not a coincidence!
Great success!
By the way, what is this PITH algorithm?
In response to Tong Yongshan's question, Fang Yu remained calm and said, "This is a deep learning algorithm model developed by Youzi Technology. I tested several different algorithms, and ultimately, PITH's bias correction effect was the best. The report includes the bias correction effects of several different algorithms."
"I need to study this report carefully again. Xiaoyu, you prepare it. The group will do a complete review tomorrow. In addition, the article can also be prepared. As long as we verify the correctness of the experimental results, we can submit it." Tong Yongshan suppressed his excitement, turned on his computer, connected to the server of Youzi Technology, and began to download all the data of this experiment from it.
Fang Yu nodded. "Teacher, I've actually written most of the paper during the lab period. It should only take two or three days. I should be able to finish it by adding the results and supporting evidence. Where do you think I should submit this article?"
Tong Yongshan looked at Fang Yu with approval. This student is so worry-free!
In all these years, I have never taught such a worry-free student!
Has it been a month since the project was started? It seems to be only about 20 days?
I have actually finished the first stage!
And the results far exceeded my expectations for the first stage!
Tong Yongshan said without hesitation: "Of course it's ECTA (Econometrica Journal)!"
Jiang Nanzhen didn't know when she had finished her work in the bathroom and returned to Tong Yongshan's office. She listened to most of the conversation between the teacher and the student.
Have you finished writing your papers?
No way?
Jiang Nanzhen subconsciously covered her mouth and looked at Fang Yu in surprise.
Although her academic ability is relatively poor, she is a graduate student after all, and she still has basic academic qualities and vision.
Although this topic basically does not belong to the field of traditional econometrics, it is closer to computer science.
However, it is not an easy task for most econometrics scholars to improve the strong factor model in the econometrics part so that it can be applied to big data analysis.
Even if we hold eight group meetings to discuss it intensively, we may not be able to produce it, but this junior undergraduate who is just in his sophomore year actually completed it by himself?
And you have to invest in ETCA! ?
Those are the top five magazines!
If you can get one of your papers published in the top SSCI journals, it will be enough to get you a teaching position in the economics department of any top university in the country!
And from what Tong Yongshan said, it seems that as long as this article is finished, it will definitely be accepted?
Is it that powerful?
Jiang Nanzhen looked at Fang Yu's computer with envy. If only he could give me the title of co-author for this article, no, at least the title of second author would be fine too.
Or maybe just steal his paper and publish it first?
The thought only flashed through my mind, and I knew it was impossible.
Not to mention that I won't be able to produce the various meetings and reports afterwards, as long as Tong Yongshan comes out to testify against me, this thing will not be accomplished.
I am not even a small fry in the academic world now. If I am accused of academic misconduct, I won’t be able to return to the financial circle.
Moreover, my purpose is not to pursue academics, but to climb up the social ladder through being an academic!
Huh? Wait!
A flash of light flashed through Jiang Nanzhen's mind.
So confused!
Why do I only focus my attention on Tong Yongshan?
It seems that this junior fellow has greater potential in the academic world in the future than Tong Yongshan, an old man who is already in his fifties?
The only problem is that this junior brother seems difficult to deal with.
Moreover, they are too young. If they can't find a partner to marry, just getting together doesn't seem to bring much benefit except for the pleasure.
Need to think about it carefully.
However, this junior brother does seem to be very capable.
Would you like to try it?
Jiang Nanzhen's foxy eyes moved around Fang Yu.
It sounds like a long story, but these were just the thoughts that flashed through Jiang Nanzhen's mind in an instant.
Before she could figure out what to do next, Fang Yu continued, "You are a member of the Econometric Society and a reviewer for ETCA. Your chances of getting your paper accepted by ETCA are definitely better."
"But I have to tell you in advance that I must be the first author. Also, there's a co-first author at Yuzi Technology, so I can only give you the corresponding author title. Is that okay with you?"
Jiang Nanzhen was a little surprised. In her opinion, the student was too bold and too direct to ask his supervisor to author his paper in such a tough manner.
What made her feel even more strange was that Fang Yu's words were quite harsh, but they didn't sound that harsh?
How did he do that? (Not magic)
Sure enough, after hearing Fang Yu's words, Tong Yongshan didn't feel any dissatisfaction towards Fang Yu. He showed a helpless expression: "You little brat, do I still care about your thesis?"
"Didn't we already sign the agreement for the first author qualification at Yuzi Technology? Now that we have the results, I can't break the contract as an expert like me, right? What is there to worry about?"
"You can designate yourself as the second author, not just the first author. It's whoever deserves it. My team doesn't have that much going on."
Fang Yu grinned: "I know that you are highly respected, upright, honest, noble, elegant, and self-disciplined..."
Tong Yongshan was annoyed: "Stop, stop, why are you talking about keeping yourself clean? Stop flattering me, kid. Go back and organize the experimental data, complete the paper, and finish the review as soon as possible. You can still make it to the review at the end of the month. I can even put you in the queue. If you can't finish it next week, you will have to wait another two months."
Haha, I’m reminding you to keep yourself clean, but don’t lose your integrity in your later years and let down your master’s wife.
It has to be said that Fang Yu actually projected some of his feelings for his mother onto Mrs. Zhao, otherwise he wouldn't care whether Tong Yongshan cheated or not.
Fang Yu chuckled and said, "Don't worry, I'll be leaving first."
Tong Yongshan waved his hand: "Let's go, let's go quickly. I get angry just seeing you."
Just as he finished speaking, Tong Yongshan remembered something and called Fang Yu over: "Remember to use LaTeX for your paper, not Word, okay?"
Fang Yu waved his hands impatiently: "I know, I know, the templates have all been downloaded."
Tong Yongshan didn't take it as an offense, he just laughed and scolded, and was as happy as Maitreya Buddha.
As soon as he went out, Fang Yu saw Jiang Nanzhen following him out.
"Junior brother!" Jiang Nanzhen took two quick steps in her high heels to catch up with Fang Yu, her voice a little breathless.
Fang Yu stopped and asked, "Senior Sister, what's the matter?"
"The teacher is so good to you. I was scared when you told the teacher about signing the paper just now, but the teacher was not angry. You are so amazing! How did you do it? Can you teach me, senior sister?" Jiang Nanzhen looked up at Fang Yu, her eyes full of admiration.
"How did I do that?" Fang Yu thought for a moment. "It's very simple. I just write a paper that can be published in a top SSCI journal, show it to him, and then just submit it."
Jiang Nanzhen's face froze. She knew very well that Fang Yu was just trying to fool her.
Fang Yu was indeed trying to appease Jiang Nanzhen. If it wasn't him, but Cheng Feng, even if he had written the article and conducted the experiments independently, if Cheng Feng had made this request to Tong Yongshan in person, even if Tong Yongshan, a man of high moral character and integrity, had agreed to Cheng Feng's request, he would still be unhappy.
In daily life, we often encounter such a situation.
If two people with the same contribution, the same position, and the same everything else make the same request, when A says it, people will think it's natural; when B makes the same request, people will think it's outrageous and unreasonable.
Why is there such a difference?
This is because these two people have established different personalities in the eyes of others from the very beginning.
From the very beginning, Fang Yu presented himself to others as someone who was opinionated, outspoken, and vindictive. Once others accepted this personality, they would be more tolerant of what he said.
If Fang Yu, from the very beginning, had presented himself to others as someone who was accustomed to giving up the initiative and letting others have the final say, then even if he played a leading or even decisive role in a matter, others would still feel uncomfortable when he made demands on them.
Because he raised the threshold of acceptance of him by the people around him too high.
The early stage when people enter a new social environment is the best stage to establish a new personality in this new social environment.
At this stage, even if you show a strong sense of self-awareness, even if you do it a little too much, most people will not cut off contact with you or blindly make enemies. The logic of normal people is to observe and see.
To put it bluntly, it means making others adapt to your excesses.
Once you adapt imperceptibly, you will gain the greatest freedom and social privileges in this new social environment.
Even if a person has a cowardly character, as long as he realizes this and deliberately changes himself when entering a new environment, he can successfully create a tough image in the new environment. Even if it is just a mask, but when the mask is worn too many times and sticks to the face, he will really become tough.
Jiang Nanzhen was feeling lucky, but she tried to maintain her elegance on her face. "But I can't learn that. There's nothing I can do. I'm just too dumb. By the way, Junior Brother, I'll treat you to dinner to celebrate your academic success."
Fang Yu looked Jiang Nanzhen up and down with a very direct gaze.
"Haha, there's nothing to do tonight, but if you have anything to say, just say it. We're all from the same sect, so there's nothing to hide."
Jiang Nanzhen's hair stood on end when Fang Yu looked at her. She felt as if she was being scanned naked by a laser.
"Um, Junior Brother, um..." Jiang Nanzhen stammered, feeling a little embarrassed, "Can you put my name on this paper as well?"
Fang Yu grinned: "Senior Sister, do you want a second work?"
Jiang Nanzhen lowered her head. "You know I don't have much talent. The teacher just said that you can designate the second author. If there are still enough spots, can you add me in?"
This chapter is a must-read for students and recent graduates entering new units.
(End of this chapter)
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